Median Income for Minnesota Bankruptcy Archives - Better Call Dave

April 14, 2023May 2, 2023

Big Bump in Median Incomes April 2023

By Dave Kelly, Minnesota Bankruptcy Attorney

Qualifying for a Straight Bankruptcy

The most common type of bankruptcy is Chapter 7. It also tends to be the most desirable form of bankruptcy. Often it is referred to as “straight bankruptcy.” It is the type of bankruptcy where usually you can get rid of all your unsecured debt in just a few months with minimal cost. There is typically no payment plan, just relief from your debt.

The best way to qualify for a Chapter 7 is to have annual income below the median for your household size in your state. If your income is a bit higher than that, you might still be able to qualify by passing a means test; but the means test is not all that easy. I would prefer to have your income below the median if we are going to do a Chapter 7. If it is much above the median, I would probably suggest a Chapter 13.

Meidan Income – A Moving Target

The US Trustee’s office has just announced the biggest increase in Minnesota median incomes for bankruptcy purposes that I can remember seeing. I calculate that the increases are around 8% for all the household sizes between one and four. Since these increases are supposedly based on a six month period, they seem to be thinking that median incomes in Minnesota have been increasing by 16% on an annual basis. I find that hard to believe, but I won’t complain.

Most years the median income numbers are adjusted on April 1st and again on November 1st. Sometimes they all go up, sometimes they all go down, sometimes the ups and downs are mixed, and sometimes they don’t change at all. Every state is different and is assigned their own set of numbers.

Latest Numbers for Minnesota

Here’s the exact Minnesota numbers as of the recent update copied from my Chapter 7 page:

One person: $ 71,643

Two people: $ 90,946

Three people: $ 114,267

Four people: $ 141,324

Add $9,900 for each individual in excess of4

For a household of one the increase is $5,309 per year. For a household of two it’s a $6,739 per year increase. It’s $8,467 for a household of three, and $$10, 472 for a household of four. If you thought you didn’t qualify for a Chapter 7 before, take another look. These numbers could make a big difference.

Call or text me at 952-544-6356. We can set up a time for a free telephone consultation to talk over the details of your case.

October 21, 2022November 22, 2022

November 1st Median Income Surprises

I just received word that the US Trustee’s office has again released new median income numbers for Minnesota. If you want to file a Chapter 7 bankruptcy, it is best if your household income is below these medians for your household size.

The new number for a household of one is $66,334 per year. For a household of two it’s $84,207; for a household of three $105,800; and for a household of four is up to $130,852.

The numbers are based on data from the U.S. Census Bureau. The figures have increased for a household of one and for a household of four, but have gone down for households of two and three. The increase for a household of one was about $800 per year, and for a household of four it was about $5,000 per year. But for a household of two it has gone down by $645 and for a household of three it’s down by $2,151. Certainly it’s a mixed bag this time. If you thought you might not be eligible for Chapter 7, look again. The history here seems to be that every time they do an update, the numbers go up at least a little bit; although that was not the case in all categories this time..

People who were not eligible before for a Chapter 7 bankruptcy might be eligible now. I do free telephone consultations. 952-544-6356. Wouldn’t hurt to check with me to see if you qualify.

March 26, 2014March 26, 2014

Higher Median Incomes Effective April 1st

As explained on the Chapter 7 page and Chapter 13 page of my site, most bankruptcy eligibility questions key off how your income compares to the median income levels set by the Justice Department for the state in which you live. The justice department has a new median income update which becomes effective April 1, 2014. The income levels for all family sizes in Minnesota have gone up by at least another $1,000 or so per year. The new median incomes are are follows:

1 Person	2 People	3 People	4 People	5 People	6 People	7 People
$49,592	$65,398	$78,715	$92,277	$100,377	$108,477	$116,577

Add $8,100 for each individual in excess of 7.

Every case is different, but in most cases if your gross income annualized over the six months before filing comes to less than the median for your household size, you should qualify for a Chapter 7 bankruptcy. If your income is higher than the median, there are other options. One option is to try doing the means test. If you pass, a Chapter 7 might still be possible. If not, your most likely choice would then be to do a Chapter 13 bankruptcy.

Even if you pass the means test, sometimes a Chapter 13 is still a better idea. It seems that once your income is above median, the trustee’s office presumes that you are not entitled to a Chapter 7. You will have to be ready to prove all the information that you put in the means test. You may be asked for several months of bank statements. You may be asked about the income of any children or other individuals in your household. The reasonableness of the expenses you claim may be challenged. By the time the trustee is finished with this process, you may decide to convert your Chapter 7 to a Chapter 13; and if you don’t you may neverthless wish you had started with a 13 in the first place.

While there are mathematical formulas involved, it remains more of an art than a science. The trustee’s office looks at the numbers but also at the totality of the circumstances in deciding how much trouble if any to give you. You need to get a competent lawyer and stay close to that person as you go through the process.

This post is for general information purposes only and does not create an attorney-client relationship. It is not legal advice. I am a debt relief agency, helping people file for relief under the federal bankruptcy code.

November 8, 2012November 8, 2012

New Median Incomes for Minnesota Bankruptcy – Again

Minneapolis Federal Courthouse, where Hennpin County Bankruptcy cases are filed — Minneapolis Federal Courthouse . If you live in Minneapolis or the Western Suburbs, this is where your bankruptcy hearing will be.

Whether you qualify for a bankruptcy and what type of bankruptcy you qualify for is largely a matter of what your household income is – gross annual income based upon and calculated from what happened over the past six calendar months. It seems to me that I just finished posting an update on these numbers, but that was in May and already new numbers have come out – effective November 1, 2012.A table showing the new numbers for Minnesota can be found on my Chapter 7 page. They are bad news for anyone who lives alone or in a two person household, since the median incomes for one and two person households have gone down this time. The median annual income for a family of one dropped by $496 per year and the median annual income for a family of two dropped by $738. For everyone else, those in households of more than two persons, the news is good. The annual median income for a family of three actually increased by $1,300. For a household of four it went up $409, and for household sizes above four it went up $409. These increases are of course per year increases, so even the largest – the one for a household of three – is only a bit above $100 per month.

I can’t explain why these numbers changed, or why there is such a difference from one size of household to another. I can only report that the change did take place. I have been watching these changes, which usually take place very six months, for several years now. It seems to me that they usually go up across the board. The fact that some have gone down this time and that the rest have not gone up by much – to me this seems to indicate serious weakness in the economy.

Whenever I am meeting with a client to go over bankruptcy possibilities, I have to explain that these median income tables are subject to change. If somebody qualifies now but is close to the edge, haste in getting the case filed might be advisable. If a person or couple is above the applicable median income, they may try doing the means test. Usually someone who is just a little bit above the median income can pass the means test and still file a Chapter 7. I have to caution, however, that above median Chapter 7 debtors are subject to much closer scrutiny by the US Trustee’s office than are those who are below the median.

Lots more can go wrong in a Chapter 7 bankruptcy when the income is above median, even if the Debtors do appear on paper to have passed the means test. Often it is safer for folks in these circumstances to file a Chapter 13.